With 2016 now officially history, a new year is upon us. And the great part about each new year is the opportunity for a fresh start.
Continue Reading Below
But before completely ignoring or forgetting what happened in 2016, the beginnings of a brand new year offer more than just a clean slate, but an opportunity for all investors to reflect on the recent past.
Here’s a few questions of self-examination I devised to push you to think:
1) Did my investments over the past year move me closer toward my financial and lifestyle goals or further away? What am I doing right? What am I doing wrong? Where do I need to improve?
2) Did I lower my investment fees and other related costs or did I increase my cost burdens? Am I (still) ignorant about how much I’m spending in investment fees and related costs?
3) Is my investment portfolio adequately diversified across the five major asset classes? Or, is my portfolio a cluttered mess?
Continue Reading Below
4) Is my portfolio a source of anxiety? What can I do right now to change this?
5) Have I consolidated my investment accounts to make it easier to manage and monitor my money?
6) What about taxes? Did I decrease my tax liabilities in 2016? Or, am I still overpaying taxes because of improperly structured investments?
7) Is my investment portfolio less risky today or more risky? Have I taken concrete steps to install an adequate cushion or margin of safety to protect my assets? How would my portfolio fair if the stock market fell 25% or more? Would it force me to change my lifestyle or retirement plans for the worse?
8) If I’m still in the accumulation phase of my financial plan, am I saving an adequate weekly/monthly sum for my age and income level? Do I pay myself first as I should, or am I still paying others beforehand?
9) If I’m in the de-accumulation phase of my financial plan, what steps have I taken to protect my savings from being completely exhausted?
10) How did my investments perform versus corresponding index benchmarks over the past year? And if I underperformed, how should it change the composition of my investments?
11) Have I made the fundamental error of turning over my wealth to faceless algorithms programmed by individuals with zero intimate knowledge of me and my family/life circumstances?
12) Do I have a written investment plan? And if not, why?
13) Do I have a trust and living will to properly govern the distribution of my assets if I’m not around? Have I updated my beneficiary information? Are ex-spouses and deceased people still named as beneficiaries on my accounts?
14) Do I have an adequate amount of life insurance? Is it permanent or temporary? What’s my permanent plan to protect my family and my assets if I prematurely die?
These are all carefully devised questions that require candid answers.
In summary, it’s in your best interest to honestly answer the questions that most directly impact your bottom line.